Flying blind: the impacts of sequesters

Avoiding furloughs signals good management, but any cuts will hurt

Jun. 2, 2013 - 02:01PM
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Federal agencies are in the throes managing more than $85 billion in cuts for the remainder of fiscal 2013. The choices are not easy, but some are more visible than others. In the largely hidden world of budget execution, the furlough has emerged as the most visible symbol of the costs of the sequesters.

Furloughs are no oneís idea of the way government should be managed. It is a salary cut for existing workers, and one that will have uncertain effects on service delivery across the government. Avoiding furloughs has become a widely shared goal among agency managers, congressional overseers and unions alike. In the public media, escaping furloughs has become a proxy for a well-managed agency, able to avoid the worst effects of this challenging budgetary year.

Furloughs have become the most visible and painful manifestation of the sequester, but agencies that steer clear of this strategy have not escaped the effects of the sequester. Doing the math, agencies avoiding furloughs will have to make up the cuts by cutting elsewhere. While these other cuts may not be as visible as furloughs, they can be equally draining on an agency, particularly over the longer term.

There is never enough money to satisfy all needs in budgeting, and this is particularly true in hard times. What we can ask is that budget trade-offs be made explicitly, with all potential costs and benefits fully disclosed. During this sequester, however, all options are not equally visible and transparent.

The visibility of federal cuts are dependent on their timing and incidence. Short-term cuts are more visible than cuts playing out over a longer term. And cuts to federal workers are more visible than cuts affecting other sectors, such as states, localities and program clients.

For instance, several agencies plan no furloughs, relying instead on hiring freezes to help them avoid the worst of the sequester. While that is good news for employees, hiring freezes nonetheless can have consequences for long-term organizational vitality, particularly for a workforce where senior workers are leaving in large numbers.

Without a cut in workload, agencies often must turn to contractors to get the job done. Hiring freezes are as potentially damaging to human capital as deferred maintenance is to physical capital.

Other agencies have chosen or been required to cut other sectors of the economy in lieu of furloughs. The Federal Aviation Administration, for example, was mandated to reduce funds from the airport grant program instead of furloughing air traffic controllers. This strategy saved us all countless hours of air travel delays, but it came at the expense of reducing funding for airport infrastructure that will be necessary to reduce future delays. In effect, Congress decided that the interests of current travelers are more important than those of future ones.

Ultimately, a truly transparent process should provide information to fully disclose all of the choices agencies are making. This would include revealing the effects of budget-cutting strategies in both current and future years, as well as their effects on other sectors of the economy. Agencies are announcing cuts in various forums, but there is little governmentwide consistency. Thus, one is hard-pressed to learn how many agencies are adopting hiring freezes, furloughs, increased user fees, grant cuts and other strategies.

The Office of Management and Budget should work with congressional appropriators to develop a standard reporting framework so we know the consequences of sequesters across the government. This is urgent, as policymakers are facing decisions now about the fate of future sequesters mandated by the 2011 Budget Control Act. Specifically, Congress must decide whether to let sequesters lower discretionary spending in the fiscal 2014 appropriations bills.

Federal agencies and OMB will also have to find ways to work around the sequester mandated for the following year as they develop the presidentís 2015 budget. While future sequesters will take a form different from the current one, policymakers should be armed with comparable information across agencies so they can make more informed decisions about whether and how to allocate fiscal sacrifice in the coming years.

Paul L. Posner is professor and director of the Master's in Public Administration program at George Mason University and former director of federal budget and intergovernmental relations at the Government Accountability Office.